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Minnesota's nursing homes face financial crisis

Eighty-five-year-old Dorothy Conrad moved into Neilson Place nursing home in Bemidji about four years ago, when health problems made it difficult for her to live on her own.

Conrad says her move to the nursing home was sudden and unexpected.

Dorothy ConradMPR Photo/Tom Robertson

"It never entered my mind. I thought I'd never be here," Conrad says. "I thought I'd always live in that house, but it didn't work out. This is home, but I still keep thinking I'd like to be home, really home, you know. But it's a nice place. I really like it."

Living in a nursing home isn't cheap. Caring for people like Dorothy Conrad costs on average about $172 dollars a day in Minnesota, but the state limits the rate nursing homes can charge to what's reimburseable through Medicaid.

That rate is about $147 dollars a day; $25 dollars less than the actual cost. That may not sound like much, but when you consider there are more than 30,000 nursing home residents in the state, the losses add up to around $750,000 every day.

According to Sandy Bensen, administrator at Neilson Place, which opened in 2004, the situation is critical.
"It's just not as much coming in as is going out, and eventually, that creates huge issues," she says.

Bensen says the 78-bed facility is usually filled to near capacity. Yet it still has an annual budget shortfall of about $500,000.

She says Neilson Place is lucky because the deficit is subsidized by its non-profit owner, North Country Health Services, which also operates a hospital.

A partyMPR Photo/Tom Robertson

Bensen says Neilson Place operates as efficiently as possible. But skyrocketing prices for food, fuel and utilities are making things more difficult.

"All of these different ways that we try to cut our costs, try to hold the line, you maybe can do for a year, you maybe can do for two years, but eventually it catches up to you," she explains. "It puts that whole area in crisis, you'd better believe. It's just not adequate. That's all there is to it."

Fifty nursing homes have closed in Minnesota since 2000.

The funding problem is worse in northwest Minnesota, where 60 percent of nursing homes are currently at risk of closing. That's according to Gayle Kvenvold, who heads an advocacy group called the Minnesota Health and Housing Alliance.

Kvenvold says Minnesota is one of only two states in the country that caps nursing home rates.

This month, Minnesota lawmakers agreed to reevaluate the rate cap for the first time since the 1990s. It means a one to two percent rate increase this year, with additional increases phased in over eight years.

Neilson PlaceMPR Photo/Tom Robertson

The Legislature also passed a modest cost of living increase for nursing homes that will go mostly toward wages. Kvenvold says it's not enough, but it's a start.

"We've got a number of facilities that are in survival mode, and this isn't going to necessarily solve everything in one year's action, but we would certainly see it as a step in the right direction," she says. "I think we will still see some closures, despite the action in this legislative session."

Fair Meadow Nursing Home in the small town of Fertile in northwest Minnesota is one of those homes that's considered at risk.

The 54-bed facility lost more than $900,000 over the past six years.

Administrator Barry Robertson says he's frozen wages, reduced staff hours and even cut back on laundry service for residents. Robertson says he's not optimistic about the future of the nursing home industry.

"It's been challenging and it continues to be a challenge, but I really do fear for the future, though, in Minnesota," he says. "I would just like to see Minnesota value its nursing homes a little bit more... And it's just kind of sad to see it really go downhill the past six years."

There are about 10,000 fewer nursing home beds in Minnesota than there were 15 years ago. But the reduction is mostly due to shrinking demand. Seniors increasingly have more alternatives, including home-based care and assisted living.

As the number of Minnesotans over 85 nearly doubles in the next 20 years, many will need nursing home care. As a result, the demand for beds could rebound as baby boomers reach their golden years.

Gallery

Havenwood Care Center in Bemidji is expanding and adding a new wing with 32 assisted living units. It's a common trend in the industry, as nursing homes work to offer more choices to a growing elderly population.MPR Photo/Tom RobertsonView full gallerySandy Bensen, administrator at Neilson Place, says the 78-bed facility is usually filled to near capacity yet it still has an annual budget shortfall of about $500,000. The facility's deficit is subsidized by its non-profit owner, North Country Health Services, which also operates a hospital.MPR Photo/Tom RobertsonThe tv room at Havenwood Care Center in Bemidji is a popular place.MPR Photo/Tom Robertson